Company Update

15 Agustus 2022

Fixed Income Report August 15, 2022

Global Market Update
• The benchmark 10-year UST note yield fell 6 bps to 2.83% on Friday (08/12/22).
• Meanwhile the benchmark 2-year UST note yield was up 2 bps to 3.25% at the same time.
• Yield curve remained inverted and the spread between 2/10-year UST note widened to -42 bps.
• The move in UST note yield came after several data release including preliminary Aug-22 reading of University of Michigan consumer sentiment index which showed higher figure than expected followed by a slightly fall in one-year inflation expectation.
• In addition, US PPI also recorded a decline of 0.5% MoM in Jul-22, the first MoM decrease since Apr-20. Domestic
Market Update
• The benchmark 10-year Indo GB yield (FR0091) was slightly up 1 bps and closed at 6.96% on Friday (08/12/22).
• The IDR rose against USD and was closed at IDR14,668/USD on Friday (vs IDR14,776/USD on Thursday).
• Indonesia’s 5-year CDS recorded a decline to 102.86 bps on Friday (vs 104.94 bps on Thursday).
• The trade balance surplus is expected to continue in July-22. MNCS estimate for trade balance : USD3,804 million; exports : +23.0% YoY; imports : +31.3% YoY.
• The trade balance surplus is likely on the back of : 1) persistently high commodity prices and 2) government policies to re-encourage CPO exports.
Market Projection
• Given the recent development on global and domestic market, we expect the 10 year Indo GB yield to move within a range of 6.90-7.10% for today.
• Attractive Indo GB series to be traded today : FR0063, FR0070, FR0077, FR0037, FR0090, FR0052, FR0085, FR0073, FR0054 and FR0091.
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